Welfare Reform Across the Atlantic

By Tommy G. Thompson and Iain Duncan Smith

In September 2013, we gathered at the National Press Club in Washington, D.C. to commemorate the 20th anniversary of Wisconsin’s welfare reform and to look ahead at the next round of reforms necessary in the United States and the United Kingdom. The two countries’ special relationship goes back much further than twenty years of course. America and Britain share a long history in which the universal values of freedom and independence are enshrined. Today these two countries continue to champion these values by giving their citizens a right to hope and the chance to aspire.

The welfare state lies at the heart of this mission. In the United States, the concept of welfare began nearly 100 years ago with noble ambitions: to care for those who could not care for themselves. Certainly in the years following the Great Depression and the dawn of the Industrial Age, this mentality was appropriate for the many who could not support themselves or their children. So too in the U.K., where after the Second World War, William Beveridge – the father of Britain’s welfare state – was driven by the laudable aim of slaying the five giants that blighted British society at the time: want, disease, ignorance, squalor and idleness.

Both welfare systems started with the best of intentions. But over time, those policies of a bygone era began to lose their shape, outstripped by the pace of change in the world and in the labor market. The policies once well-suited to provide relief in desperate times, eventually began to incentivize intergenerational reliance on welfare instead of the pursuit of work. The unfortunate trade, then, was public aid in exchange for independence and dignity.

As politicians from both sides of the Atlantic, we have clearly seen the harsh reality of these failings. In Wisconsin in the late 1980s, a child on welfare was twice as likely to drop out of school, have their own child out of wedlock and end up on welfare as an adult. To boot, each new generation stayed on welfare three times longer than the last. In the U.K., teenagers who suffered poverty in the 1980s remained nearly four times as likely to be poor in adulthood.

In Wisconsin, these failings prompted an end to the Aid to Families with Dependent Children Program. It was replaced with Wisconsin Works, which in empowered these families to regain health, rather than entitle them to welfare checks that ensured poverty-level income. For Wisconsin, work was the only reliable path to human dignity and self-sufficiency – and the approach worked. Within several years, the welfare caseload plummeted 93 percent—from 98,000 families to 6,800 families. Workforce participation reached all time highs and poverty reached historic lows.

The reforms were so successful that Wisconsin’s bold ideas soon became conventional wisdom. Other governors quickly adopted their own versions of the same model and a Democratic president, Bill Clinton, even collaborated with a Republican Congress to make welfare-to-work the law of the land. But even now, with ever-rising numbers of citizens on food stamps and disability benefits, it is apparent that there is still much to do to complete the move from welfare to work across America.

In the United Kingdom, radical welfare reforms are now underway, driven by the belief that everyone should be able to shape and control their lives through work. Here too, the aim is to repair a system that for too long has trapped Britain’s most disadvantaged families in a spiral of dependency. This fact is particularly illustrative: two-fifths of those actually capable of some work-related activity have nevertheless been stuck on benefits for at least three out of the past four years. This failure comes at great cost to the national treasure—more is spent on welfare each year than defense and education combined. But more than that, it is a terrible waste of human potential.